SEC updates small entity definitions for investment companies and advisers

The Securities and Exchange Commission adopted amendments to update the definitions of small entities for registered investment companies, investment advisers, and business development companies, according to an SEC press release.

These amendments reflect the substantial growth in the asset management industry since the asset-based thresholds were last set nearly 30 years ago, the SEC said. The updated definitions aim to better capture the population of small entities under the Regulatory Flexibility Act (RFA).

The changes are intended to minimize the significant economic impact of SEC rules on these smaller market participants by modernizing the rulebook and eliminating unnecessary regulatory burdens, SEC Chairman Paul S. Atkins stated in the release.

The RFA promotes efficient regulations by considering alternative approaches and tailoring rules to the characteristics of regulated entities, with a goal of reducing the economic impact on small entities. The SEC’s amendments align with this objective by updating how small entities are identified in the investment sector.